France and 11 European Member States have injected nearly 7 billion euros into the cloud

12 Member States of the European Union, including France, are coming together to build the next generation of cloud services and infrastructure. They published a joint manifesto on February 7 to express their desire to pre-notify the European Commission of an Important Project of Common European Interest (IPCEI) by the end of March 2022. The first projects are expected to be launched in the fourth quarter of 2022..

The announcement was made on the first day of the conference, called “Building digital sovereignty of Europe“, hosted by France as President of the Council of the European Union.

An envelope of 7 billion euros
The total budget estimated at 7 billion euros (public/private co-financing) will be placed on the table of France, Germany, Belgium, Spain, Hungary, Italy, Latvia, Luxembourg, Netherlands, Poland, Slovenia and Czech Republic. France, for its part, plans an investment of 300 million euros.

As a reminder, PIIEC is a European mechanism that aims to promote innovation in strategic and promising industrial fields through transnational European projects. It is not funding from Europe but a group of States notifying Brussels of its intention to collectively inject funds into a strategic sector, here is the cloud. This mechanism is interesting because it allows State public authorities to fund initiatives beyond the limits normally set by European regulations with State assistance.

Create jobs, champions …
This project will come togetherEuropean companies, laboratories and academies“, details Cédric O, Secretary of State for digital migration and electronic communications, for”create value and jobs across Europe while supporting the emergence of French and European cloud technology champions“. In practice, more than 60 projects involving 180 European companies will be financed by 12 participating States. The goal:”create a continuum of services from the cloud to the edge“.

This new IPCEI is also part of a European ambition and advances three of the six major European strategic priorities, detailing the participating States. It is about supporting a new generation of technologies suitable for the digital age, creating an attractive investment environment and giving Europe a modern and climate neutral economy. It is also fully in line with European data strategy. The Data Governance Act aims to create a data market.

A massive construction site
This will allow us to finally have data storage that is truly empowered“, declared Bruno Le Maire, Minister of Economy, Finance and Recovery. An ambition at the heart of the French presidency of the European Union. But we must not hide our face: the site is very large. Currently, European players are on the decline against American companies.Amazon (Amazon Web Services), Microsoft (Microsoft Azure) and Google (Google Cloud Platform) alone captured 69% of the European market, according to a study by Synergy Research Group published in September 2021. And their market shares continue to grow thanks to large investments, nearly 14 billion euros were invested in the last four quarters to upgrade and expand their regional network hyperscale data centers.

Among European players, Deutsche Telekom leads with 2% market share. German was followed by French companies such as OVHcloud and Orange, but their market share fell between the first quarter of 2017 and the second quarter of 2021.

No more Privacy Shield, what now?
The repeal of the Privacy Shield by the Court of Justice of the European Union has once again revived the cloud debate. This text facilitates the transfer of personal data to the United States by recognizing that American law offers guarantees equivalent to the General Data Protection Regulation (GDPR). The ability of American authorities to get their hands on European data under the Cloud Act in particular justified the invalidity.

Since this decision, regulators have multiplied announcements to push public bodies and companies to select European providers to replace the services offered by American companies. Therefore, the National Commission for Computing and Liberties (CNIL) has recommended a move to French collaborative tools for higher education and research. The inter-ministerial digital director, Nadi Bou Hanna, said in a circular published on September 15, 2021 that Microsoft’s 365 offer (formerly Office 365) did not follow government doctrine ”Clouds in the middle“.

However, to respond to these calls, the market still needs to offer equivalent solutions that meet the needs of businesses and public bodies. It remains to be seen if this envelope of 7 billion euros will be enough to succeed in this challenge.

Franco-American licenses: a Trojan horse?
The French government provided what could be called an escape route. American companies can continue to offer their offers under licenses granted to French companies. This is how Google Cloud signed an agreement with OVHcloud (for which we are still waiting for news), then joined Thales in October 2021. Microsoft approached Orange and Capgemini through a dedicated entity, called “Blue“, whose launch date is still unknown until now. Only Amazon has not yet announced a partnership.

These companies promise that their hybrid solutions will have a popular label ”SecNumCloud“. Provided that the data is really out of reach of the United States, Anssi recalls in a new version of its repository published in September 2021. It contains details on”clarification of criteria for immunity from extra-Community laws“. In particular,”technical requirements intended to limit access to the technical service infrastructure of third parties and uncontrolled transfers and specific legal requirements associated with the service provider and its links to third parties“. In summary: after the effect of the announcement, real guarantees need to be put in place for these solutions to be viable.

No European preference
Asked about this topic by The Digital Factory, Secretary of State Cédric O admitted that the technical and legal situation is particularly complicated. He recalled, however, that there was no “european preferences“it makes it possible to force companies to choose services offered by national companies rather than American giants.”It is up to major French groups to choose between OVHcloud, Outscale or go through a joint venture of Microsoft, Capgemini and Orange. They decide it“said the Secretary of State.

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